Page 20 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs

315.8 #Unique M19M / N19M
_____refers to a difference between the amount, classification, presentation, or disclosure of a
reported financial statement item and the amount, classification, presentation, or disclosure that is
required for the item to be in accordance with the applicable financial reporting framework.
a) Misstatement
b) Error
c) Fraud
d) Any of the above

315.10 SM21
For a given level of audit risk, the acceptable level of detection risk bears _____ relationship to the

assessed risks of material misstatement at the assertion level.
a) direct
b) Inverse
c) no
d) none of the above

315.12 #Unique M19M
One of your junior audit team members is confused with the term ‘material misstatement’. You
explain him that a material misstatement is untrue information in a financial statement that could
affect the financial decisions of one who relies on the statement. Which of the following would
constitute material misstatement?
(1) An error of Rs. 5,000 in relation to assets of Rs.20 lakhs.
(2) A payroll fraud of Rs.100 in a company where profit before tax is Rs. 11,000.
(3) Non-disclosure of a material uncertainty.
(4) Financial statements have been prepared on a going concern basis when the company is in the
process of being liquidated.
a) 1 and 2
b) 3 and 4
c) 2 and 3
d) 1 and 4

315.13 SM21
Risk of material misstatement has ________ components
a) one
b) two
c) three
d) four

315.15 M19M/N19M/SM21
SA 315 establishes requirements and provides guidance on identifying and assessing the risks of

material misstatement -
a) at the financial statement levels only.
b) at the assertion levels only.
c) at the financial statement and assertion levels.
d) at the financial statement or assertion levels.

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